HF 538 (LSB 2077YH (7) 91)

HOUSE FILE 538

BY  TUREK

A BILL FOR

An Act relating to employment of persons with disabilities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  91D.2  Minimum wage —— persons with disabilities.
   1.  On or after July 1, 2026, an employer shall not, pursuant to 29 U.S.C. §214(c), pay an employee less than the minimum wage provided in this chapter.
   2.  The department of inspections, appeals, and licensing shall engage in outreach to make employers of persons with disabilities in this state aware of the requirements of this section.
   3.  Subsection 1 does not apply to a nonprofit organization operating a sheltered workshop as otherwise provided by law. For purposes of this subsection, “nonprofit organization” means a nonprofit entity that is exempt from federal income taxation pursuant to section 501(c)(3) of the Internal Revenue Code. This subsection is repealed July 1, 2027.
    Sec. 2.  Section 216C.1, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  3.  To ensure full participation in the social and economic life of this state by persons with disabilities, it is declared to be the policy of the state of Iowa that competitive and integrated employment shall be considered the first and preferred option when serving persons with disabilities who are of working age to obtain employment. This policy applies to programs and services that provide services and support to help obtain employment for persons with disabilities. All state agencies shall follow this policy and ensure that it is effectively implemented in their programs and services. This subsection shall not be construed to require any employer to give preference to hiring persons with disabilities.
    Sec. 3.  Section 216C.1A, Code 2025, is amended by adding the following new subsections:
   NEW SUBSECTION.  01.  “Competitive employment” means work in the competitive labor market that is performed on a full-time or part-time basis in an integrated setting and for which an individual is compensated at or above the minimum wage provided in chapter 91D, but not less than the customary wage and level of benefits paid by the employer for the same or similar work performed by individuals who are not disabled.
   NEW SUBSECTION.  1A.  “Integrated setting” means, with respect to an employment outcome, a setting typically found in the community in which applicants or eligible individuals interact with nondisabled individuals, other than nondisabled individuals who are providing services to those applicants or eligible individuals, to the same extent that nondisabled individuals in comparable positions interact with other persons.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill provides that in order to ensure full participation in the social and economic life of Iowa by persons with disabilities, it is declared to be the policy of the state that competitive and integrated employment shall be considered the first and preferred option when serving persons with disabilities who are of working age to obtain employment. The bill specifies this policy applies to programs and services that provide services and support to help obtain employment for persons with disabilities. The bill directs all state agencies to follow this policy and ensure that it is effectively implemented in their programs and services. The bill shall not be construed to require any employer to give preference to hiring persons with disabilities.
   The bill prohibits an employer from paying an employee less than the minimum wage provided in Code chapter 91D pursuant to 29 U.S.C. §214(c) on or after July 1, 2026. 29 U.S.C. §214(c) is a provision of the federal Fair Labor Standards Act that authorizes persons with disabilities to be employed for less than the federal minimum wage in certain circumstances. The bill directs the department of inspections, appeals, and licensing to engage in outreach to make employers of persons with disabilities in Iowa aware of the prohibition.
   The prohibition does not apply to a nonprofit organization operating a sheltered workshop as otherwise provided by law. This exception to the prohibition is repealed July 1, 2027.